On-Premises or Cloud ERP? How to Decide.

Once available only to larger companies, Enterprise Resource Planning (ERP) software is no longer out of reach for small to medium business. With so many choices now available, it can be a challenge to evaluate and choose a solution that will be a good fit for your company. One of the first things to consider is whether to run your ERP system on-premises or go with a “cloud” – or SaaS (Software as a Service) solution. As with anything else, it’s important to weight the advantages and disadvantages of both options.

The big advantages of on-premises deployment of an ERP system is that it allows you to keep your business data in-house and close to its original source. Assuming you have the proper controls in place, you shouldn’t need to worry about data leaks or security threats. If your company works with a lot of very sensitive business data, this might make the most sense.

Generally speaking, your Value Added Retailer will provide you with all the help you need setting up and configuring the system. (At Accountnet, when we work with clients to deploy in-house ERP software, we also provide for the training of users and stakeholders.) However, beyond the initial set-up phase, you will likely need in-house IT personnel to manage the system so it’s important to assess whether your IT staff has the time and necessary capabilities.

There may also be higher up-front costs involved with implementing on-site ERP because you pay for the infrastructure – that is, the servers and data storage. And oftentimes a company will try to forecast these requirements for several years into the future, so you can end up paying for capacity that never gets used.

The last, but possibly the most costly, reason for avoiding on-premises systems is that if something goes wrong, it’s on you to deal with.

The big reason most small businesses are moving to cloud computing is that these systems are hosted elsewhere – the headaches involved with server maintenance are somebody else’s. Routine maintenance, data back-ups, equipment upgrades – all of these functions are taken care of by the provider. Cloud systems also tend to be less expensive, because you only pay for what you use. Most services, including Microsoft Dynamics GP, allow you to easily scale up as your business needs change.

Critics of cloud ERP argue that when you house the system, you know that it’s physically secure because you control who accesses the system and physical space. With cloud-based ERP providers, you can’t know how safe your data really is. But there is an argument to be made for cloud providers being more secure than your own internal systems, especially if you don’t have sufficient IT resources to conduct regular security audits.

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